learn more about EW Forecasts

ELLIOTT WAVE ANALYSIS - Latest Market Commentary

Stock Indices

As global stock indices are edging higher, the picture is becoming more and more mixed which reflects the uncertainty present in the markets. This is primarily because of the proximity of most indices to their original Elliott Wave target areas coupled with a generally overbought condition. Although the short-term outlook for the S&P 500 and Dow Jones (DJIA) suggests a slight extension to original higher objectives, the Eurostoxx 50 and Shanghai’s Composite Index are in a very vulnerable position as their pattern structure is approaching completion. Is it an irony that at this point of time the Chinese Alibaba group stages the U.S. history’s largest initial public offering that, according to Bloomberg, owes its size to a virtual non-stop rally in U.S. shares with a value increase of US$ 15 trillion over the last years? Might this be a contrarian signal par excellence? ###The euphoria sparked by this event could fuel another finalising attempt higher followed by a major reversal that would set a directional change for the next several months to come. The most diverging outlook to this scenario is provided by the Nikkei which has significantly outperformed during the last weeks and, more recently, broken above its late Dec.’13 high of 16320.22. This gives way to a 7% upswing from current levels which seems quite rich when compared to most of the other indices. Yet the comparison with the US$/Yen, positively correlated with the Nikkei 225, suggests upside targets to 17500.00+/- for the stock index are viable.

Financial Updates Currencies

Currencies (FX)

Continuation higher for the US$ index suggests that the smaller 3rd wave within the upswing from the July low of 7974 is still underway – upside projections measure to 8551 for a finalisation. A reversal from there will then trigger a temporary sell-off to idealised support at 8386 prior to continuation higher. This is not as closely mirrored by the Euro/US$ as the currency pair is already engaged in a corresponding smaller 5th wave which allows for the completion of the entire downswing from the July high of 1.3701 towards downside support at 1.2758. This discrepancy of degrees might be resolved during the next few weeks as the Euro could unfold into a counter-trend expanding flat pattern – the ‘B’ wave of this sequence could synchronise with the US$’s 5th wave into new price extremes prior before both stage a more pronounced counter-trend move. The more important change on the Euro/US$ is the slight revision of the ultimate downside objective. Basis the amplitude correlation with the US$ index, it seems unlikely the Euro could finalise its multi-month downswing from 1.3993 at ultimate objectives of 1.2528. Instead, slightly lower levels towards 1.2417-1.2396 are now in focus, based on two different fib-price-ratio measurements. Following Scotland’s rejection of its independence in the long-debated referendum on Thursday,### Sterling shot higher into a recorded high of 1.6525 but was subsequently rejected. The rally from the 1.6052 low is seen as counter-trend in nature and there is some validity in the assumption that it could already have completed as the substructure depicts a single zig zag advance to 1.6525. This allows to gauge the support level towards 1.6246 where wave ‘C’ of the zig zag began – a break below there would naturally eliminate a 1-2-1 as well as a 1-2-3 sequence from 1.6052 and thus significantly lower the probability of an upward acceleration from current levels. US$/Yen’s strong correlation with the Nikkei 225 is evident as the upside momentum for the stock index was mirrored by the currency pair’s advance in the latter half of last week. This indicates that intermediate wave (4) that was previously shown unfolding into a 2-year counter-trend expanding flat sequence instead unfolded into a contracting symmetrical triangle that already completed at the July ’14 low of 10106. The current advance from there is labelled as wave (5) with ultimate objectives towards 11238 to finalise primary wave 1. Thus, a reversal from 11238+/- will begin a substantial multi-month counter-trend decline.

Financial Updates Bonds

Bonds (Interest Rates)

US10yr yields traded into a high of 2.655% last week. Seen from this year’s low of 2.300%, the upside momentum clearly points towards additional gains. Shorter-term, however, there could be time for a temporary pause as the advance so far might have completed either a 1-2-1 or a 1-2-3 sequence from 2.300. In the first case, a more pronounced counter-trend decline could occur – this would also tally with the corresponding futures that are about to complete wave ‘D’ within a multi-month contracting triangle and are poised for an upside move as wave ‘E’ during the next weeks. In the second case, only a modest retracement is expected (idealised support is measured to 2.520+/-) prior to continuation higher. The overall picture remains ###strongly bullish as US10yr yields have completed a multi-month counter-trend expanding flat sequence at 2.300%. Meanwhile, DE10yr yields are still trading in a rather constricted trading range. Upside acceleration has not occurred so far which suggests that they are bound in an expanding flat pattern that is likely to finalise during the next few trading sessions. This is corroborated by the Bund future which staged strong price rejection from last Friday’s low of 147.63. It suggests an upswing towards 148.90 prior to a reversal that would initiate downside acceleration and thus reinforce the larger downside tendency – correspondingly, DE10yr yields should engage in 3rd of 3rd upside acceleration. Failure to do so would open up the possibility of an additional break below the 0.858% low.

Commodities

Precious metals sold off sharply on Friday. Gold approached its downside support area at 1211.03+/- whilst silver broke below its equivalent 18.22+/- level. This significantly weakens the case for the alternate scenarios that depict a reversal from current levels followed by a substantial advance during the next months, with gold targeting 1475.00+/- and silver 25.12+/-. Although a reversal from current levels is still possible (which would, in silver’s case, transform the alternate horizontal flat into an expanding type), gold’s current downswing from 1344.93 looks incomplete which adds downside pressure and thus corroborates the immediacy of additional declines. This emphasises ###the preferential counts. In the case of gold, a continuation towards the 1100.00+/- area is expected, and silver is not far away from its min. objective to 17.48 which increases the likelihood for lower objectives to 16.46. Oil is also weak as it is approaching its September low of 90.43 and expected to continue lower. Basis fib-price measurements, next downside support is projected to 88.21 to end a smaller 3rd wave. Overall, the downtrend in progress from the June ’14 high of 107.68 is firmly established and expected to continue in the months ahead. Ultimate objectives remain towards 77.28 to finalise a multi-year horizontal flat sequence.

LATEST ARTICLES

THE ‘INFLATION-POP’ - PRECIOUS METALS SET TO SURGE INTO RECORD HIGHS

Bloomberg hosted a Precious Metals Forum on 23rd May and WaveTrack International was invited to present our latest Elliott Wave price-forecasts. The event was sponsored by the CME Group and Johnson Matthey.

OUTLOOK & FORECASTS FOR 2013

Highlights:

  • The 2013 outlook for global stock indices and commodities remains very bullish and is entering the last stage of the ‘inflation-pop’ phase that originally began from the post-financial crisis lows of 2008/09
  • This is expected to ignite another period of asset buying that increases risk-on multiples by a minimum 45% per cent and in some cases as much as +300% per cent, sending some global stock indices and commodities into record highs
  • Shorter-term, there is a danger of a downward adjustment of -5-8% per cent, but then sharp price advances to resume
  • Commodity related stock indices and equities are expected to outperform as a sector during the next 12-16 months
  • Banking stocks to participate, but most will not exceed their pre-financial crisis highs

As always, this year’s Outlook & Forecasts for the next twelve months are created applying the Elliott Wave Principle for the assessment of pattern and price amplitude, also Cycle Analysis for the timing of the larger trend reversals. Not always do they jive, but they seldom contradict and more often, provide valuable insights into one or two variations of a similar theme within a seemingly unlimited amount of possibilities.

Even though this report outlines the price expectancy of all asset classes for 2012 it will also illustrate how this coming year fits together into the larger picture. The reasoning behind this is to move away from the 'black-box' stereotype and show you why the results relate to their specific outcome. Overall, this report deals with two different time-periods – long-term and inter-mediate term. Long-term refers to the uptrends from the Great Depression of 1932 onwards and inter-mediate term for the coming year and into 2013.

HOW TO INTERPRET EACH ELLIOTT WAVE CHART

What do you see when looking at an Elliott Wave chart? Just lots of numbers & letters overlaying the price data? – or do you see definable patterns that are immediately familiar? And how do you interpret the results of the analysis and put it into an effective trading plan? Read on and test your own knowledge of these subjects and much more...

A COMMODITY SUPER-CYCLE?

Recent reports of a Commodity Super-Cycle grabbed my attention for two reasons – first, this is diametrically different to the outlook I foresee developing during the next decade, and second, this terminology has surfaced at a time when various commodities have already undergone large percentage gains measured from the Feb.'09 lows

THE 'DEFLATIONARY SCENARIO'

The primary theme of this presentation focuses on a 'Deflationary' outlook, forecast as the dominant aspect continuing during the next decade. This is derived from analysing the Elliott Wave pattern structure of the CRB (Cash) Index during its expansionary period of the last 76 years.

THE 'FLASH CRASH'

The Update Alert! messaging service of EW-Forecast Plus responded to the sharp collapse and the following recovery of US stock indices during the volatile trading session on the 6th May.

OUTLOOK FORECASTS FOR 2011

This analysis centres around the S&P 500 that is used as a proxy for other global indices. The great bull market beginning from the 1932 low ends 68 years later in 2000 - other global indices peaked later in 2007 (75yrs) – some still continuing to progress.

PRODUCTS & SERVICES

EW FORECASTS

Our Flagship Institutional Service updating multiple time-frames across all asset classes...

Live Update FORUM

A unique advisory service that links you 'Live' in a private online meeting room with our analysts...

WTI Alerts

'Register' now and receive the latest EW-Product-Alerts via e-mail with updates for WaveSearch & up-coming tutorials and seminars.

TESTIMONIALS

"I just wanted to congratulate you on the EW-Compass reports launch. I'd say all the work you've all put into this project is well worth it… never cease to be amazed by the harmony that you find between the fib relations you highlight and the Elliott count you propose. You are a true descendant of RNE, and I'm quite sure he'd have really loved to see your work… Another aspect that sets you apart is your deep knowledge of the how and why of pattern relationships between higher & lower degrees of the same price action. So much to learn there". - T.S.

ELLIOTT WAVE PATTERN

INTRODUCTION TO THE WAVE PRINCIPLE

The Wave Principle, often referred to as Elliott Wave is a unique methodology that applies Natures Laws, those encompassing the Natural Sciences and Universal Geometric Philosophies to the financial markets. It allows us to view price fluctuations as an organised process that can be non-linearly extrapolated to gain a glimpse into the future direction of trends, counter-trends and amplitudes on any market or contract traded around the world.

Expanding Diagonal Patterns - Do they actually exist? - Elliott's inclusion of the Contracting Diagonal

In R.N.Elliott's original treatise of "The Wave Principle (1938)", he introduces us to diagonal patterns for the first time on page 21. Under the heading, Triangles, Elliott describes the difference between horizontal triangles that represent hesitation within an ongoing, progressive trend and diagonal triangles that form the concluding 5th wave of a larger five wave sequence.

NEWS & EVENTS

Tradersworld Online Expo #12 – Starts 12th November 2012

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 12th Trader Expo held online for 7 weeks starting on 12th November 2012 and ending in the new year on 6th January 2013. Peter’s presentation is entitled “Elliott Wave Price Forecasts & Cycle Projections – Three Phases of the 18 Year Bear Market ~ ‘Shock–Pop–Drop’” for more information visit http://tradersworldonlineexpo.com/

Announcement: 123rd Battery Council & Trade Fair Convention in Miami, 1-4 May 2011

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 123rd Trade Fair Convention of the Battery Council in Miami, 1-4 May 2011. Peter’s presentation is entitled "The Historical Price Trend of Lead and Applying the Elliott Wave Principle to plot its course into the Future".

ELLIOTT WAVE PRICE-FORECAST UPDATES